How Rail Companies Could Avoid Increasing Train Fares

The increases this week mean that rail fares have gone up by almost 25% in the last four years, far more than inflation. The train companies defence is that they need to generate more income due to reducing subsidies.

However information revealed by a Freedom of Information enquiry to East Coast reveals that another way to increase income would be to convert first class carriages to standard class. East Coast's figures show that, over the year, a standard class carriage generates 61% more income than a first class one.

Like most inter-city rail travellers I am used to the frustration of walking past half-empty (or entirely empty) first class rail carriages to reach the often overcrowded standard class section. I often wonder if this can possibly make business sense for the railway? The answer, it turns out, is No.

As East Coast Rail is owned by the government it is subject to the Freedom of Information Act. So earlier this year I submitted an enquiry about the income split by first and second class. The response is revealing.

On average first and standard class seats generate about the same annual income: £26,700 for first class and £27,485 for standard. However a standard class carriage contains many more seats (64 to 41 in the East Coast train I caught to Leeds this weekend). This means that a second class carriage generates over 60% more income over a year.

Standard class carriages generate 61% more income

1st class v Standard

Annual Income: £144.5 million v £492.2 million

Seats per train: 123 v 407

Trains: 44 v 44

Income per train seat: £26,700 v £27,485

Seats per carriage: 41 v 64

Income per carriage: £1,094,697 v £1,759,035

These are the figures for one operator only and may not be typical of all rail services. However there is no reason to suppose others are markedly different. Also these do not take account of higher costs, as some first class services include extra staffing and free food and drink - which would mean those services make even less financial conribution.

It was reported earlier this year that the government was to pay one operator (First Great Western) to convert a first class carriage to standard class. However it is not clear why government subsidy is needed to make a change that seems to make blindingly obvious business sense.

If standard class carriages generate 61% more income, then it would seem to be a simple financial decision to start converting first class carriages on their own initiative? This does depend on more demand being created for standard class. But, given the crowded nature of many services, and the fact that first class use is normally such that it could be fitted into less carriages, it seems likely to lead to extra income.

This also adds weight to the argument of those campaigning against HS2 that an easier way to increase capacity would be to convert first class carriages to standard class on the lines to Birmingham, Leeds and Manchester.

So we seem to have a case of all rail operators (except Chiltern, who did remove nearly all their first class carriages) pursuing a policy that annoys and disrupts the majority of its customers (those packed into standard class) and makes no financial sense at all. Instead of increasing rail fares still further, converting first class carriages to standard class could be a direct way to increase income.